The credit card aftermath

Christmas 2007 was a hard time for many. With a large percentage of the UK population in varying degrees of debt, a significant number of families had their Christmas on credit.

The early months of 2008 could see these families struggling to cope with the added debts and falling further and further behind with payments. Many will be relying on a piece of plastic to help them.

Credit cards are proving to be almost like a second income for some people, but it's an income that can jump up and bite you if you aren't careful. With many firms charging APR in excess of 25%, you may as well use that bit of plastic like a spade and dig yourself deeper into the money pit.

But credit cards aren't all bad. If you've found you've gotten in over your head over Christmas, but your credit rating isn't badly affected, try applying for a 0% balance transfer card and use this to pay off a Christmas loan. You can avoid much of the interest you'd otherwise pay, but make sure you keep up the repayments.

If you do decide to use this way out, make sure you do your research on credit cards before you commit to one. Look for one with as long a 0% interest time as possible, and if you can, get the lowest credit limit. Consider how much you can reasonably afford per month, multiply that by 12 and set that as your desired limit. This is a basic way to make sure you'd be able to afford the monthly repayments.